Meanwhile the release of the Federal Reserve's extensive minutes overnight showed some members were keen to bring down the size of the central bank's balance sheet - something that has not gone down well with investors on either side of the Atlantic.

In London, Easyjet was the top riser on the FTSE 100 - it gained 4 per cent after reporting passenger numbers grew by 10.6 per cent in March.

But education specialist Pearson tumbled 6.7 per cent after going ex-dividend and following a downgrade by broker Exane BNP Paribas.

Wall Street were unimpressed last night with the Fed's decision to cut back its debt

The FTSE 100 Index ended down 0.4 per cent or 28.48 points at 7,303.2, as investors waited for news from US President Donald Trump's meeting with Chinese leader Xi Jinping

European counterparts including the French Cac 40 and German Dax rose 0.6 per cent and 0.1 per cent, respectively.

Sterling also failed to find direction, trading flat against the US dollar at $1.248 but rising 0.1 per cent versus the euro to €1.172.

On oil markets, Brent crude prices rose 1.3 per cent to $54.70 a barrel, having recovered from a drop a day earlier when Energy Information Administration data showed an increase in US crude inventories.

The market moves came ahead of a meeting between the US and Chinese leaders in Florida, which experts say could provide much-needed fuel for markets.

Investors were also digesting minutes from the US Federal Reserve's latest meeting, which signalled that the central bank is likely to cut down its $4.5billion US dollar (£3.6billion) balance sheet sooner than expected, offloading assets it bought up to support the economy during the financial crisis.

BP shares fell 0.75p to 464.45p after the company fended off a fresh shareholder rebellion, having slashed boss Bob Dudley's pay package by 40 per cent for 2016 and cut his maximum earnings by $3.7million (£3million) over the next three years.

Unilever's London-listed shares rose 38.5p to 3,978p as it announced plans to offload its spreads business, which includes Flora and Stork, in a bid to revamp the business after batting off a $143billion (£115billion) takeover attempt from Kraft Heinz.

Pearson fell 45.5p to 637p to the bottom of the FTSE 100 after its stock was downgraded by Exane BNP from 'neutral' to 'underperform'.

EasyJet shares rose 43p to 1,060p following a 10.6 per cent jump in passengers in March, compared with the same period a year earlier.

Mothercare shares rose 3.75p to 118p after it reported a 4.5 per cent jump in like-for-like sales across the UK in the final quarter to March 25 thanks to a 13.6 per cent jump in online sales.

The biggest risers on the FTSE 100 were easyJet up 43p to 1,060p, British Land Company up 14p to 636p, Persimmon up 45p to 2,145p, and Barratt Developments up 10.5p to 559p.

The biggest fallers on the FTSE 100 were Pearson down 45.5p to 637p, Lloyds Banking Group down 1.9p to 63.59p, Aviva down 15p to 514.5p, and Paddy Power Betfair down 200p to 8,385p.

17:41

City pundits on today's session

Joshua Mahony, of IG, said: 'The focus is likely to be on the US for the rest of the week, with tomorrow’s jobs data wrapping up a relatively stop-start week.

'Much of today’s stock market uncertainty has been fuelled by House Speaker Paul Ryan’s comments yesterday, when he speculated that tax reform will take longer to implement than Obamacare.

'Given the difficulty we saw both in the implementation and now repealing of Obamacare, the prospects of a drawn out pathway to lower taxes is a kick in the teeth for investors.

'The stock market bounty of lower corporate taxes has been one of the main reasons for the 2017 equity rally so far, and with growing uncertainty over the delivery there is reason to believe we could see the rally stall.'

Connor Campbell, financial analyst at Spreadex, said: 'There is the chance for fireworks in the next 24 hours. First, of course, is the get-together between Captain Tango and China’s Xi.

'Trump’s behaviour when meeting his international counterparts has moved the markets in the past, and there is no reason why this summit between the US president and his most powerful peer will be any different.

'If the Trump/Xi conflab does somehow fail to produce anything of interest then there is still tomorrow’s non-farm jobs figures to spark some excitement, the report arguably growing in importance following Wednesday’s Fed meeting minutes.'

16:54

FTSE 100 has finished 28.4 points down at 7,303.2

Markets have been left reeling after the US Federal Reserve said it plans to reduce its balance sheet.

Last night's revelation in the Fed minutes came before this session's meeting between US President Donald Trump and his Chinese counterpart Xi Jinping.

This has the potential for fireworks given previous comments from the the Trump camp.

Promises by Trump to resolve the North Korea crisis have scared investors, with China expected to play a major part in calming down the stance of their noisy neighbour.

Tomorrow could be bumpy on the markets in London.

16:53

BOND NEWS: UniCredit issues its first bond in the US for ten years

Under pressure Italian bank UniCredit has issued a bond in the US for the first time in ten years.

It will be test of investor demand for Italy’s largest bank as the country’s financial sector continues to struggle. The bank has sold $2billion of dollar-denominated bonds, split between 5-year and 10-year maturities, at coupons of 3.8 per cent and 4.6 per cent respectively.

That is significantly better however than the 10% they were down earlier after the market took fright at a downgrade of the troubled company by brokerage Exane.

The company has lost over a third of its market value since share price peak in July last year.

15:10

The company behind Victoria's Secret left with little to cheer lately

L Brands is hugely successful marketing lingerie with Victoria's Secret models dressed up as angels, but away from the runway, investors haven't had much to cheer about lately.

The group saw sales fall 10 per cent in the five weeks ending on April 1, while sales at its ingerie brand declined by 13 per cent.

Ed Sheeran with models Adriana Lima and Alessandra Ambrosio

14:57

US stocks edge higher at the opening bell

The Dow Jones industrial average edged up 14 points after data showed US jobless claims posted the biggest drop in almost two years last week, further pointing to the strength of the labor market and the overall economy.

A Labor Department report showed 234,000 Americans applied for jobless claims last week, far less than 258,000 in the week before and economists' estimates of 250,000.

The jobless claims report comes ahead of Friday's nonfarm payrolls data and a day after a strong private-sector jobs report, that sparked a rally in the markets yesterday.

But, the rally was short-lived and US stocks sharply reversed course after the Federal Reserve signaled it could change its bond investment policy this year and trim its balance sheet as long as economic data held up.

Investors are also cautious ahead of the meeting between President Donald Trump and his Chinese counterpart, Xi Jinping.

On top of the agenda is the possibility of Trump using trade to pressure China to do more to rein in North Korea's arms program.

The meeting comes as some investors question Trump's ability to deliver on his pro-growth promises, such as tax cuts, following recent setbacks in pushing reforms through Congress.

13:08

FTSE 100 down 24 points at lunch at 7,307.2

The FTSE 100 has been driven lower by a series of major dividend payers, including HSBC, Rio Tinto, Lloyds and Aviva going ex-dividend.

Shares in publisher Pearsonhave fallen by almost 9 per cent after a broker downgrade and the shares going ex-dividend.

Exane, a broker that has historically supported the firm, downgraded the company and the stock has now declined more than 36 per cent from last July’s peak.

Elsewhere financials are coming under pressure with Aviva, Lloyds and Standard Chartered all trading firmly lower on the day.

Mining stocks are one of the few bright spots on the blue-chip index with Randgold Resources, Anglo American and Fresnillo all sitting on notable gains in excess of 1 per cent.

Tullow Oil shares are down 10 per cent this morning after the issue of rights to shareholders as part of its planned £607million fundraise.

The rights issue is part of Tullow’s move to speed up the deleveraging process and get debt back under control.

It’s a strategy that makes sense and wasn’t a massive surprise to us, but with $4.8billion of debt still to be dealt with, there’s a long way to go before balance sheet questions are settled for good.

12:46

Sad day for Share Radio which will give its final broadcast in May

After two and a half years of broadcasting Share Radio will be closing down in May.

Its founder and financier Gavin Oldham has taken the decision following difficulties in building sufficient revenue and in attracting external investment.

Commenting on the closure, Gavin Oldham said: 'Share Radio has many supporters in the financial services industry but unfortunately this has not extended sufficiently into working with us as sponsors and advertisers, or indeed financiers.

'It is therefore with great regret that I have decided to disband our excellent team and close the business.'

12:27

BP boss Bob Dudley has seen his pay package slashed by 40% for 2016 - but it's still massive

The oil giant confirmed the new proposed pay deal will be 'simpler and more transparent' and lead to 'lower levels of reward' as it looks to avoid a repeat of last year's investor revolt.

Almost 60 per cent of BP shareholders voted against a 20 per cent hike in Dudley's pay to nearly $20million for 2015 despite the group posting its largest annual loss for at least 20 years and axing thousands of jobs worldwide.

The group's latest annual report revealed that Dudley's pay package was cut to $11.6million last year.

11:39

BOND NEWS: Saudi Aramco to raise $3billion

Saudi Aramo is planning to raise $3billion from its debut Islamic bond.

The company increased the size of the bond - known as sukuk - after demand exceeded supply.

The oil giant is selling debt ahead of an initial public offering in 2018 as the country’s finance ministry plans to cut taxation on the company, potentially raising its valuation to more than $1trillion.

Prime Minister Theresa May had been in Saudi Arabia earlier this week to sweet talk the company into a listing in London in an attempt too soothe financial industry fears over Brexit.

11:31

Don't clock on, 'log in'! How Deliveroo speaks to couriers in 'gibberish' phrases designed to dodge giving them workers' rights

Takeaway delivery firm Deliveroo has created a 'gibberish' language of terms critics say are designed to avoid giving their workers' rights.

The firm has banned its staff from using words that might give the impression its riders and drivers are employees, allowing the company to save on sick pay, pensions and holiday pay.

Couriers are referred to as 'independent suppliers' rather than staff members, and managers should use the word 'onboarding' instead of 'hiring', a training document reveals.

Staff are told to 'indicate their availability' using a system called 'Staffomatic' rather than asked when they can work.

This is why the Fed minutes and its decision to shrink the bank's balance sheet matters

The minutes from the Federal Open Market Committee’s monetary policy meeting on 14 March, published yesterday evening, show that Janet Yellen and the US Federal Reserve are moving toward withdrawing quantitative easing and shrinking the central bank’s balance sheet, in what would be a key test of both the strength of America’s economy and its financial markets.

While any such move to reduce the size of its balance sheet and 'sterilise' QE will be seen by some as the ultimate sign of the bond-buying scheme’s success - namely that the US economy is back on track 10 years after the first signs of sub-prime mortgage distress became clear and finally capable of functioning without emergency support.

Yet sceptics will argue this is the ultimate test of not just the US economy but America’s stock market.

Since the launch of the QE bond-buying scheme in autumn 2008 under Ben Bernanke the assets on the US Federal Reserve’s balance sheet have swelled from $900billion to $4.5trillion.

This prompted doubters to argue the US economy and its stock market were being supported by the Fed’s newly-created money and efforts to drive bond yields to unsustainably low levels, creating unforeseen side effects, such as huge increased levels of borrowing by consumers and corporations, companies buying back shares with cheap debt to goose their reported earnings figures and a bull run in stocks which at times appeared to rely more on cheap money than it did on corporate profits and cash flows.

The FOMC minutes offer no promises of sterilisation and stress that any move to withdraw this stimulus would be made gradually, mirroring the baby steps made under Janet Yellen to tighten monetary policy via three interest rate increases so far (since December 2015) and the decision to stop adding to QE in 2014.

The battle lines are now drawn between bulls, looking forward to a healed US economy and one fired up by the proposed Trump reform programme, and bears pointing toward historically very high valuations on a market-cap-to-GDP and cyclically-adjusted price earnings, moderate corporate profit momentum and the withdrawal of QE as key obstacles toward fresh advances in US stocks.

All of this also matters to investors in the UK’s stock market, even if they have no direct exposure to the USA at all. This is because in stock market terms the UK tends to follow where America goes.

11:11

Bitter Butter at Unilever: Flora, Stork and I Can't Believe It's Not Butter on the way out

Anglo-Dutch giant Unilever is selling off some of its well-known spread brands, including Flora, Stork and I Can't Believe It's Not Butter.

Unilever is in the middle of a major cost saving drive and the sales of its spreads unit could generate up to £6billion.

Giving the spreads the push, Unilever said their 'future now lies outside the group.'

What is Mar-a-Lago and why does Trump keep inviting world leaders there?

President Trump and Chinese President Xi Jinping will meet at Mar-a-Lago later.

Mar-a-Lago is a Spanish-style club in Palm Beach in Florida - a property that original owner Marjorie Merriweather Post's estate willed to the US government for use as a diplomatic and presidential retreat after her death in 1973.

Trump bought the estate in 1985 and turned it into an exclusive club, which now boasts a membership fee of $200,000 and is a haven for the tony Palm Beach set who pull up to the gate in Bentleys and Rolls-Royces.

A White House official said: 'It's a place where he feels comfortable and at home, and where he can break the ice with Xi Jinping without the formality, really, of a Washington meet-up.'

But Mar-a-Lago has already been the scene of some controversy for Trump.

When a North Korean missile test disrupted Abe's visit there, Trump and the Japanese leader were seen at a dinner table on the terrace discussing how to respond, as club members looked on from nearby tables.

Mothercare has reported a 12.2 per cent drop in total group sales in the fourth quarter as a weak performance in its international business offset growth in the UK.

The retailer, which specialises in products for expectant mothers and children up to age eight, said international sales in constant currency fell 1.7 per cent in the 11 weeks to 25 March 2017.

But shares are up 2 per cent.

09:54

Broker downgrade leaves Pearson at the bottom of the FTSE 100

Exane BNP Paribas has downgraded Pearson from neutral to underperform.

Pearson has also gone ex-dividend this session, which never helps share prices.

09:23

Tusk is in town, to discuss Brexit

President of the European Council Donald Tusk will meet Theresa May at Downing Street at midday.

09:03

Co-op group back in the red, plenty of work left to do

The Co-operative Group posted its first annual loss since 2013 after falling into the red by £132million as it wrote off the value of its stake in the troubled Co-operative Bank.

Losses at the Co-op Group come against profits of £23million in 2015 and mark the first time it has fallen back into the red for three years, when it was plunged into crisis as the full scale of the woes at the banking business emerged.

08:48

Meanwhile in London this morning .........

Unilever has decided to offload its spreads division, including Flora margarine and Stork butter.

The Anglo-Dutch consumer goods giant concluded that the future of its underperforming spreads business, which also includes I Can't Believe It's Not Butter, 'now lies outside the group'.

Unilever said: 'In 2015 we set up a separate baking, cooking and spreads unit to allow greater focus on the issues facing the business.

'However, the underlying category remains challenged in developed markets and we have now taken the decision to launch a process to either sell or demerge spreads.'

It has been reported that the sale of the division could yield up to £6billion for the group.

The review was aimed at delivering more value to shareholders after Kraft Heinz's failed $143billion takeover attempt and it will also see job cuts across the company.

08:43

Fed spooks the markets

Often the Federal Reserve meeting minutes fail to move the markets.

But investors were shocked last night to see Fed chair Janet Yellen and her colleagues discussing reducing the central bank’s $4.5trillion balance sheet, a conversation that most were not expecting to happen until June.

The prospect of this bond portfolio unwinding sent a shiver through the US markets.

08:32

Events in the US dominating the session and global markets

Nerves are settling in as President Donald Trump’s summit with China’s President Xi Jinping at the Mar-a-Largo club in Florida approaches.

Investors do not know what kind of Trump will turn up. Will it be the Trump that met Prime Minister Theresa May or the one that met Chancellor Angela Merkel.